WAL - Bill Ackman predicts more bank runs from Monday

2023-03-11 20:14:49 ET

Billionaire investor Bill Ackman expects more bank runs from Monday morning after Silicon Valley Bank, the California-based subsidiary of SVB Financial Group ( NASDAQ: SIVB ), collapsed following what turned out to be the largest bank run in U.S. history.

This week, SVB Financial ( SIVB ) lost 60% as California regulators closed SVB on Friday after the firm, a key player in the tech and venture capital community, witnessed the largest U.S. bank failure since the global financial crisis over a decade ago.

The Federal Deposit Insurance Corp. (FDIC) which took control of its deposits, later said that SVB customers could fully access their insured deposits as early as Monday morning.

“From a source I trust, ( SVB ) depositors will get ~50% on Mon/Tues and the balance based on realized value over the next 3-6 months,” Ackman wrote tweeted on Saturday.

“If this proves true, I expect there will be bank runs beginning Monday am at a large number of non-SIB banks,” he added in a potential reference to the banks that are not systemically important to the financial system.

“Absent a systemwide (FDIC) deposit guarantee, more bank runs begin Monday am,” the Pershing Square founder wrote, adding, “no company will take even a tiny chance of losing a dollar of deposits as there is no reward for this risk.”

In the wake of SVB’s collapse, regional banks were among the biggest decliners in the financial sector this week as PacWest Bancorp ( PACW ) lost 55% and Signature Bank ( SBNY ), Western Alliance ( WAL ), and First Republic Bank ( FRC ) all dropped more than 30%.

The S&P Bank Index ( KBE ) fell more than 4%, recording the largest weekly decline since the start of the pandemic in March 2020.

Ahead of SVB’s failure, Ackman urged a government bailout to protect bank depositors, noting that “VC-backed companies rely on SVB for loans and holding their operating cash.”

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